We are consulting on amending our regime for regulating key individuals and governance arrangements in insurers.
Why are we consulting on this?
This Consultation Paper (CP) proposes changes to the Approved Persons Regime for insurers not subject to the Solvency II Directive (Non-directive firms, or NDFs) primarily to address:
- provisions in the Financial Services (Banking Reform) Act 2013 (the Act) applying to all FSMA-authorised firms and
- the Prudential Regulation Authority’s (PRA) proposed reforms to the scope of its pre-approval regime for NDFs
Who is this paper aimed at?
This consultation affects all firms with permission to effect or carry out insurance contracts that fall out of scope of the Solvency II Directive, and which hold assets of £25 million or less, including UK branches of foreign firms. While this consultation will primarily be of interest to firms and their approved persons, consumers may be interested in how the staff they interact with will be required to comply with the proposed Conduct Rules.
What is the background to this?
The Act and the Solvency II Directive provide important domestic and European legislative context to our proposals for amending our regime for regulating key individuals and governance arrangements in insurers. The Act introduced provisions which apply in varying ways to different classes of FSMA-authorised firms. It also enables the regulators to introduce enforceable Conduct Rules for certain individuals in these firms. The relevant provisions will come into effect in March 2016.
In addition to provisions aimed at supporting the prudential strength of firms, the Solvency II Directive includes new requirements to support good governance and to ensure the fitness and propriety of persons performing important functions within insurers. We have published a number of consultations setting out our proposals for Solvency II firms taking into account this legislative context, as well as the PRA’s intention to reduce the scope of individuals it will subject to pre-approval.
The proposals in this CP take into account proposed changes to the Approved Persons Regime for Solvency II firms and the desirability of maintaining a coherent approach across the two classes of firms, whilst being mindful of the principle of proportionality.
The proposals have been designed to work effectively alongside those of the PRA, and this CP should be read in conjunction with the corresponding PRA consultation.
We are asking for feedback on the proposals set out in this CP, and in particular we would welcome responses to consultation questions 1-5, set out at Annex 4.
Please send your responses to us using our online response form by 15 May 2015. This is a shortened consultation period, to allow for full transition to the reformed regime in time for the relevant Banking Reform Act provisions coming into force in March 2016.
We will consider your feedback and plan to publish our final rules later this year.
We will also do some further consultation to cover our approach to actuarial CF12, and CF12a functions (depending on PRA proposals in this area) changes to forms, consequential changes, and details of transitional arrangements for implementing these reforms.
Want to find out more?
For more information see: